Question

You save $5,000.00 and invest 60% of it in stocks while leaving the rest in a savings account earning a 4.9% APR. The stock increases 9% in the first year and loses 4% of its value the second year. What is the total amount gained during the 2 years?

Answer 1

Hi there:)
Amount invested in stock
=5000×0.6=3000
Amount invested in a saving account
5000-3000=2000

The stock increases 9% in the first year
3,000×(1+0.09)=3,270
and loses 4% of its value the second year
3,270×(1−0.04)=3,139.2
Amount of a saving account after two years
2,000×(1+0.049)^(2)=2,200.8

the total amount gained during the 2 years
3,139.2+2,200.8=5,340...answer

Hope it helps